The European Union this week adopted its first law requiring disclosure of non-financial information by large companies, but guidelines to help companies implement the new directive are still in the offing.

The Council of the European Union approved the non-financial reporting directive without discussion this week. The council had previously agreed to the legislation with European Parliament, which adopted the measure in April.

About 6,000 large companies and groups will be affected by the new law, which requires the inclusion of environmental, human rights, diversity, anti-corruption, and anti-bribery information in annual reports. Dating back to 2011, the goal of the new requirement is to boost transparency and corporate social responsibility of large undertakings without placing an undue administrative burden on those affected.

“Firms, in particular large ones, play a role in the EU economy that goes far beyond the mere production of goods and services,” Pier Carlo Padoan, Italian minister of economy and finance, said in the council’s statement. “With the approval of this directive, EU legislators have acknowledged this fact and reinforced the framework of corporate social responsibility. Higher transparency through disclosure of non-financial information will enhance the accountability of large firms towards European citizens. It will allow investors to reward socially responsible business conduct, thus promoting sustainable growth.”

The directive affects “public interest entities” with more than 500 employees. Those entities are defined as listed companies, banks, insurance firms, and other undertakings deemed to have significant public relevance because of their size, status, or nature of their business. Small and midsize enterprises are exempt from the new rules.

Among the information required are details about a company’s diversity policies, including age, gender, educational level, and professional background of administrative and management staff as well as boards of directors.

Companies falling under the new directive also may be required to include country by country tax reports for any country in which they operate, including information on profits earned, taxes paid on those profits, and any public subsidies received. The European Commission is expected to make its recommendation on the country-specific tax reports by 2018, which is a separate issue from new reporting mandates for companies in the extractives industry.

Member States will have two years to transpose the non-financial reporting directive into national law. The first reports will be required for the 2017 financial year.

The new directive “will drive the long-term performance of the EU’s largest companies by significantly improving their transparency and, concretely, the disclosure of material non-financial information,” Michel Barnier, the outgoing commission vice president in charge of internal market and services, said in a statement. “Companies, investors, and society at large will benefit from this increased transparency.”

The commission is charged with developing non-binding guidelines to help companies meet the new disclosure requirements. The commission noted, however, that the directive allows for “significant flexibility” in the way in which companies disclose the information. Companies can include the information in a separate report or choose to follow whatever national, European, or international guideline they wish.

However, that flexibility may make it difficult to accurately compare the relevant information from different companies. Officials with the London-based Climate Disclosure Standards Board (CDSB) said consistency in implementation is key. CDSB is a consortium of businesses and environmental groups which has been working on a voluntary framework to include environmental information in corporate financial reports.

“CDSB acknowledges the EU’s intent, but has concerns that, as drafted, the directive will not sufficiently address the information gap due to the lack of consistent and comparable information that will be reported,” Mardi McBrien, CDSB managing director, said in an email sent to Compliance Week. “CDSB’s mission is to address the need for consistency of non-financial information in mainstream financial reports. We urge the European Commission to develop its guidance with consistency in mind, and also recommend Member States do the same when transposing the directive.”

Jarlath Molloy, another CDSB official working on the framework, said over the past year and a half his group has been working to expand CDSB’s framework to go beyond climate change and include other environmental factors included in the EU’s directive. The goal, he said, is “to ensure companies have the tools and guidance they need to report consistent, comparative, and timely information that will be useful for investors.”

A second consultation on the CDSB framework begins this month, with its release expected in the spring.

Topics